Mortgage, how much do you cost me? Fixed rates rise above 2%, a sign that the war in Ukraine, with skyrocketing inflation due to huge increases in the price of crude oil and food products, is already tightening financial conditions even before the ECB raises rates. And despite the signs of stabilization, from industry to business and household confidence, after the negative GDP data in the first quarter, there is also “high uncertainty” in the second. Istat and Bankitalia data photograph a picture of the dynamics of the Italian economy in an international context that sees growth slowing everywhere, European inflation at record levels in April (7.5%), and markets in a phase of decided volatility.
Mortgages, the fixed rate exceeds the 2% threshold
In detail, the ECB reports an average increase of 1.47% in rates on new mortgages in March, with the strongest increase, on a monthly basis, since 2011. Italy, with the spread that in the meantime in the over two months of conflict has flown to over 200 basis points, again in March it exceeds 2% (2.01%) against 1.85 in February, reaching the highest levels since August 2019 based on data provided by the Bank of Italy. In concrete terms, if a year ago Mr. Mario Rossi had taken out a fixed-rate loan of 100 thousand euros to buy a house, he would have spent about 50 euros less per month than today. Six hundred euros less per year. The era of easy mortgages is over.
The return of inflation and GDP estimates
With the flare-up of prices triggered by the Russian invasion, the markets anticipate the moves of the ECB (which despite the slowdown in growth will have to bring the monetary policy bar back to the center in order not to further fuel inflation). But the farewell to the ultra-favorable financial conditions of the last decade, hand in hand with the return of inflation, is only one of the factors that slow down growth: war, inflation, which affects purchasing power, weighs heavily. consumption, fears about energy supplies, the global slowdown exacerbated by the lockdowns for covid in China that create new bottlenecks to trade.
And the GDP? After a 0.2% drop in gross domestic product in January-March over the previous three months, Istat is not unbalanced on the second quarter: “The uncertainty about the evolution of the Italian economy remains high”. There is, in March, “a stabilization of industrial production which in the first quarter marked a cyclical decline of 0.9%”, although the figure follows a rebound in February (+ 4.0%) after the fall in January (-3.4%) and December (-1%), and Confindustria estimated the previous week, for the month of April, at -2.5%. In this climate of uncertainty, there are also some indicators that bode well: the labor market, which in March continues to see a monthly increase in employment (+ 0.4%), driven by the female component (+ 0.9%, equal to + 85 thousand units). And in April, inflation marked a first deceleration, interrupting the phase of progressive increases that had been going on for nine months.